Introduction to forest sinks
Forests remove carbon dioxide - the most common greenhouse gas - from the atmosphere. Forests, therefore, play an important role in reducing greenhouse gas emissions and in the response to overall climate change.
The New Zealand Government is implementing programmes that recognise the valuable contribution of forests in reducing greenhouse gas emissions. The programmes provide financial benefits in the form of carbon credits to landowners that develop forests on their land. The two main Government programmes are:
- Permanent Forest Sink Initiative (PFSI)
- Emissions Trading Scheme (ETS).
The PFSI and the ETS are voluntary schemes in which landowners earn carbon credits as their forests grow and remove carbon dioxide from the atmosphere. See below for more information on these schemes.
The forests that are entered into these programmes are sometimes referred to as 'forest sinks'.
Wellington City Council's forest sink programmes
As part of the Council's 2010 Climate Change Action Plan, the Council is:
- actively registering eligible Council land into the PFSI and the ETS schemes
- managing the carbon credits generated from the Council's forest sinks to maximise benefits to the Council and ratepayers
- providing information and advice to Wellington landowners on the PFSI and ETS schemes.
To view the Council's forest sinks in the PFSI and ETS schemes, see:
Map of Wellington City Council's Forest Sinks (201KB PDF)
To be eligible for the PFSI and the ETS schemes, landowners must have 'post-1989 forests'.
A post-1989 forest is a forest that has been established after 31 December 1989. Post-1989 forests can include exotic or indigenous species. Such forests must meet the following requirements in order to be registered into the PFSI or ETS schemes:
- Forest land covers an area of at least 1ha.
- The land contains forest species that create, or are likely to create, tree crown cover of more than 30% on each hectare.
- The forest species are trees capable of reaching five metres in height at maturity in the place where they are growing.
- The forest is wider than 30m.
Permanent Forest Sink Initiative (PFSI)
The PFSI scheme promotes permanent indigenous or exotic forests on previously unforested land with the aim of reducing climate-change effects.
Landowners participating in the PSFI scheme enter into a covenant with the Crown that is registered against their land title(s). The covenant is in perpetuity and essentially binds the landowner to protect the forest and puts significant limitations on harvesting. In return for the carbon absorbed by their forests, PFSI participants receive each year from the Government Kyoto-compliant carbon credits, known as Assigned Amount Units (AAUs).
The Council has registered 1,270ha of Council land into the PFSI scheme and is seeking to register an additional 111ha before the end of 2012.
The Council's PFSI land is mostly made up of old pastoral land in the Outer Green Belt. The land has been acquired by the Council over the past 10 to 20 years and is now being actively managed to encourage the growth of native vegetation. The majority of the Council's PFSI land also has scenic reserve status.
The Council's PFSI forest sinks will give the Council around 4,100 AAUs per annum. These carbon credits can be traded by the Council on the carbon market.
In December 2011, the Council completed its first carbon trade of voluntary emission reduction units (VERs) that were linked to its PFSI forests. The trade resulted in net revenue of $120k. This revenue will be put towards the Council's reserve management programme.
Permanent Forest Sink Initiative - Ministry for Primary Industries
Emissions Trading Scheme (ETS)
The ETS offers much more flexibility than the PFSI scheme. Like the PFSI scheme, both exotic and indigenous post-1989 forests are eligible for the ETS. However, the ETS does not have the same restrictions on harvesting as the PFSI scheme and is therefore very well suited to commercial forestry plantations such as radiata pine and Douglas-fir.
Owners of post-1989 forest land (as well as those with rights to post-1989 forests), who voluntarily enter the ETS, earn carbon credits called New Zealand Units (NZUs) as their forests grow. If and when the forest owner harvests their ETS forests, the owner must pay back the government the NZUs that are equivalent to the amount of carbon lost through harvesting.
The Council has around 30ha of exotic pine forest entered into the ETS. Pine forests have a much greater growth rate than indigenous forests. The Council receives around 1,200 NZUs each year for its 30ha of pine forests.
Under the Emissions Trading Scheme (ETS), pre-1990 forest land is defined as:
- land covered by forest on 31 December 1989; and
- land that was predominately exotic forest species on 31 December 2007.
When landowners deforest pre-1990 forest land, they are mandatory participants in the ETS and incur liabilities for the carbon emissions from those forests. These liabilities reflect the liabilities New Zealand incurs under the Kyoto Protocol. However, harvesting pre-1990 forests, followed by replanting or natural regeneration is not considered deforestation and does not incur liabilities.
Pre-1990 forest landowners were eligible for a one-off allocation of NZUs from the Government. To receive the allocation, landowners needed to submit an application by 30 November 2011.
The Council has approximately 213 hectares of pre-1990 forest land. The Council submitted an application to the Government for its pre-1990 forest land, for which the Council is expecting to receive around 12,780 NZUs as a one-off allocation in two lots:
- 4,899 NZUs by 31 December 2012
- 7,881 NZUs after 31 December 2012
Pre-1990 Forest Land: Allocations and Exemptions - New Zealand Legislation